HIH chief got $4.7m for expected fall in salary

August 9 2002By Margot Saville

HIH chief executive Ray Williams received a $4.7 million lump-sum payment in 1992 to "compensate" him for an expected fall in his salary package after the company floated that year, the HIH Royal Commission heard yesterday.

In other evidence, the inquiry heard details of a $1 million "golden hello" and "phantom share plan" granted to new finance director Dominic Fodera in 1995.

The 1992 lump-sum payment to Mr Williams was on top of two $750,000 payments to Australian managing director Terry Cassidy and HIH executive director George Sturesteps. The only reference to these sums was contained in a note to the float prospectus, which referred to the total sum of $6.2 million.

Asked if the board would have known of the payments, Mr Williams said he would be "very surprised if the board in completing the prospectus were not fully aware of the breakdown of that amount of money".

The chief executive explained that the payment was part of a five-year plan to compensate him for a fall in salary from $1 million to $500,000 a year. ");document.write("

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Counsel assisting the inquiry, Wayne Martin, QC, repeatedly asked Mr Williams how five times $500,000 had added up to $4.72 million. In the end, HIH annual reports revealed that the insurance head had been paid between $1 million and $1.7 million in 1990 and $500,000 in 1991.

Whatever the reasoning, Mr Williams added that someone other than himself had sanctioned the payment. "I have said to you three or four times that the calculation was carried out by (auditor) Arthur Andersen and (insurance broker) CE Heath . . . but I'm certain CE Heath wouldn't have arrived at $4.7 million if it wasn't an appropriate figure, but the details I do not remember at this stage," he said.

When former Arthur Andersen partner Dominic Fodera was invited to become HIH finance director, Mr Cassidy outlined a salary package of $400,000 a year as well as a "golden hello" equivalent to $1 million in cash after tax.

Mr Williams said the "phantom restricted share plan" was structured to avoid the expense of getting shareholder approval.

In the afternoon, Mr Williams' barrister, Robert Richter QC, made an impassioned plea for his client to be left alone, after a commercial radio broadcast called for HIH victims to form a "posse" at the hearing.

This had resulted in a "scrum", where Mr Williams, "was confronted by a number of people who had been asked to come out and create a disturbance".

Justice Neville Owen said he would do everything he could to ensure each witness was treated with "consideration and respect."